On Friday, the Third Court of Appeals issued an opinion in an accelerated appeal of a trial court’s denial of a special appearance, finding that the appellants in question did not have, in their individual capacities, sufficient contacts with the State of Texas to be subject to a Travis County District Court’s personal jurisdiction.
The case involved a California corporation’s breach of a commercial lease of some Austin office space. The corporation, which provided PR services to what the Court refers to as “dot.com” companies, closed its doors in June 2001. The landlord sued not only the company, which was a party to the lease, but also the individual officers of the California company, who lived and worked solely in California.
The individual defendants filed special appearances,
claiming that Texas lacked personal jurisdiction over them because (1) all actions regarding the Cedar Bridge lease were performed in their corporate capacities, (2) all payments from NWR to them occurred in California, and (3) they did not know and should not be expected to have known that the dot.com industry would crash in January 2001, meaning that they did not accept their biannual bonus with any intent to defraud NWR’s creditors. Niehuas, Ryan, and Wong each attached affidavits swearing to these facts.
Appellants’ pleadings and affidavits also negated the standard jurisdictional facts, such as not having a residence, maintaining an agent, a place of business, a bank account, real or personal property, personal employees, or a mailing address in Texas; not committing a tort or entering a contract in Texas; and not paying taxes in Texas.
The landlord, in response, asserted that certain bonus payments the company made to the individual defendants at the end of 2000 constituted fraudulent transfers, as the company and its officers ought to have known that the “dot.com” industry was about to crash (or was in the process of crashing). The Court of Appeals, however, stated that even if the bonus payments were fraudulent transfers to the detriment of the company’s creditors, even the fraudulent transfer scheme occurred solely in California, so it could not provide a basis for personal jurisdiction over the individual officers.
Edwin Niehaus, William Ryan and Carrie Wong v. Cedar Bridge, Inc., Cause No. 03-05-003340CV
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